Demand side management: How it can save you money

Consider the proverbial supply versus demand equation, and how this relates to the 5,920 petajoules of energy that Australia consumed in 2015 (a petajoule is 1,000,000,000,000 kilojoules). When you think about it, the supplier of this energy controls its availability and how much it costs – on the flip side of this, what can the consumer control? Well, how much electricity they use, but also (to an extent) when they use this electricity. The when is the concept behind demand side management.

The most common method for reducing power bills is to use measures that reduce the amount of electricity drawn from the grid. This can be accomplished with energy-efficient appliances, which reduce monthly energy needs; but equally it can be achieved with renewable energy systems that can actually generate energy that would otherwise have to be purchased.

There is, however, a less-known approach that is equally effective for reducing energy expenses: demand-side management (DSM), which consists on controlling the time of the day when energy is consumed to minimise its cost. Many utility companies charge higher electricity rates when their power grid is fully loaded, and much lower rates at hours when demand is low. If this is your case, you can deploy DSM to shift your consumption to hours with the lowest energy prices, saving money even if your total consumption stays the same!

Demand side management, renewable energy and efficiency upgrades

When demand side management is combined with energy efficiency upgrades and renewable sources like solar or wind power, it is possible to achieve synergy among the three systems:

Renewable generation systems provide energy at zero cost other than a small maintenance expense each year, once you have recovered your initial investment. For solar, we reckon this takes about 6 – 7 years.

Energy efficiency helps you reduce the total consumption of your property. Viable measures for homes and small businesses include LED lighting, as well as heating and cooling equipment with a high E3 Energy Rating.

With demand-side management, you can ensure that any energy drawn from the power grid comes at the lowest possible cost.

DSM can also help you maximise savings from solar panels or wind turbines. If you have already deployed renewable energy, there are two times of the day to which you can shift your energy consumption: hours when electricity from the power grid is cheap, or any moment when you have surplus generation from your renewable energy system.

What are viable DSM measures in homes and small businesses?

Many DSM systems operate with some form of energy storage, and in small-scale applications the two most useful forms of energy are electricity and heat.

A battery array can be used to store surplus generation from wind turbines or solar panels. If the batteries still have storage capacity available after absorbing all the surplus energy, they can fill up with cheap off-peak energy from the power grid. For those who are interested, our next blog is all about what battery arrays are currently on the Australian market.

Heat pumps with storage tanks can accumulate hot water when electricity rates are low, which is then used to meet any heating needs when rates are high. This prevents the consumption of expensive energy for heating.

There are also demand side management systems that don’t require energy storage. For example, smart thermostats can minimise the energy consumed by space heating and cooling devices when electricity rates are high: rooms are pre-cooled or pre-heated on hours before the utility company starts charging the highest rates, and only the necessary energy to preserve room temperature is consumed afterwards.

To learn more about how demand side management might work for you, please contact Bulk Energy on 1300 46 2855 (1300 GO-BULK).